The Funeral Services Industry

The funeral services industry is one industry that is seemingly recession proof. In the near future, no one is going to stop dying. It is a natural part of the life cycle, and when you or a loved one does expire, there will always be funeral directors reaching out a hand to help you and your family through one of the most difficult times an individual or family will have to face. Though under one broad term, funeral services actually include many sub categories, as well as many ways the practice can be done. While some industries are facing tough times, many funeral homes are seeing a peak in business as the baby boomer generation dies off. This, along with the still living baby boomers slowly retiring and leaving their positions as morticians and prep room attendants to move on in their lives. It opens the door to a new generation of small business owners and small business employees. One problem facing the industry is the threat of monopolization. Around the world bigger companies are slowly buying out independently owned funeral homes and replacing them with an almost factory atmosphere environment. This will all be discussed in detail.

History and Background of the Funeral Industry:

The funeral industry itself only began in the twentieth century; prior to this time burials and ceremonies were held privately at the deceased homes with only family and close friends present. The deceased were often buried in their own backyard or somewhere on their property that held some significance to them (Funeral Wise, 2010). This started to change when urban areas began to pop up and then cemeteries were introduced (Funeral Wise, 2010). The process of embalming, which is the act of removing any matter in the body that can immediately cause odour as well as preserving, disinfecting, and restoring the body to make it look as life like as possible, was not used by mass culture until around the time of the civil war (Funeral Wise, 2010). It was needed in order to preserve the deceased long enough to get back to their home town/country (Funeral Wise, 2010). As the practice became increasingly relevant the practice of embalming turned into a job. A funeral director refers to the profession that actually plans, and helps carry out the ceremony. They can also be referred to as an undertaker or a mortician. Funeral directors came into existence as a way to help relieve the grieving family of some of the stress that comes with planning a funeral (Funeral Wise, 2010).

Furniture makers often did it because they already possessed the skills needed to produce the coffin, and owned a fleet of black horses in most cases. These horses were used to tow the hearse. These factors meant that funeral services was a logical choice for a secondary business (Funeral Wise, 2010). It is interesting to note that many small town funeral homes still use furniture stores to manufacture their coffins to this day (Personal Communication, December 1, 2010). In the beginning of the modern day funeral home, most homes were family owned, and passed down through the generations or sold to another family where it moved through the generations there. In the 1960’s however, there was an overhaul of the industry in which larger companies slowly started buying out the smaller independent homes. This is referred to as consolidation (Funeral Wise, 2010).

When this happens, often the name of the funeral home is kept in an effort to keep the following the home has built over its existence. The consolidating company would take over the back office, things like book keeping, bookings, and all of the finances (Funeral Wise, 2010). To date however, a larger company owns only an estimated fifteen to twenty percent of the industry in the United States, the remaining still owned by families (Funeral Wise, 2010). It may be of interest to note that this is not just going on in the United States, but also in places as close as Kitchener-Waterloo. Another issue that the funeral service industry has had to deal with recently is the up and coming industry called alternative funeral service. These institutions take the funeral and simplify it down to its bare minimums in an effort to cut costs, thus being attractive for families who do not have the money to throw a lavish funeral, or simply don’t feel the need to spend the money.

Troubles in Paradise:
With a seemingly foolproof business plan, which rises and falls with death rates but never actually can actually stop, it’s hard to imagine how there can be problems with the industry. There are however. Firstly, the competition from town to town varies. This can mean a near perfect business if you are the only home in your town, but spell trouble if you are one of several all competing for the same clients (Personal Communication, November 26, 2010). In town where more than one exists it is in the best interest of the companies in competition to buy out their rivals and try to form a monopoly thus controlling more of the town. “We are seeing this happen more and more in our (Tri Cities) area, Gibb’s (Gilbert MacIntyre Funeral Home, who own two homes in Guelph; one in the north end and one in the south end, as well as a third one in Rockwood), are the best example locally. They are still run by the family, but owning two homes increase their chances at getting business” (Personal communication, November 26, 2010).

The problem of consolidation, which is when a large corporation buys out the smaller independently run funeral homes in an effort to control the industry. This can be good and bad. These corporations allow the name of the home to be kept so the funeral home can keep up appearances. It also may buy a struggling business that otherwise may have to close down. On the other hand, these funeral homes are run similar to factories and rely on specialization to run. No longer does one person deal with the family, plan the funeral, make all arrangements, pick up the deceased and prepare his or her body. In a consolidated firm there are people who specialize in each job, meaning one person just handles the family, one just for preparing, and so on.

This is beneficial if an individual is skilled at embalming, but has no social skills, but can also lead to someone who may be skilled at both not being allowed to meet with families and use his social skills to comfort the grieving family. The new face of funeral services has been described as “being reshaped by consolidation and pre-selling from an essential existential experience into a essential retail one” (Lynch, 2004). We now live in an era where funerals are no longer taken care of by the family members that are left behind by the deceased, but rather where your own funeral is an investment that you pay for during your lifetime. Essentially what these companies have done is turned solemn day of remembrance, into a retail event (Lynch, 2004).

One other major problem that the modern day funeral homes are the emergence of alternative funeral practices, these are things like green funerals and the most basic funeral, which cost much less, but provide much less. Essentially these companies slash prices in an effort to attract lower income families. These companies provide little service, but if simple is what you’re after then alternative funerals are ideal. They threaten the funeral industry that we know and have grown up with by undercutting them. “Families always spend money memorializing them [the deceased], often equating dollars spent with respect paid, and rarely shopping around” Companies like these are trying to reverse this, which although noble, cuts existing businesses out at the legs. Some other people simplify their service by just going for a simple cremation, which costs just over one thousand dollars (Waldroupe, 2010).

Green funerals are as simple as they sound, Green. This means no chemicals are used to preserve the body, as many people who practice this are earth conscious and don’t want any more harm done to it, or simply do not want chemicals cleaning out the insides of their loved ones. But additionally a green funeral entails that the deceased has no casket (to not waste wood), and no grave side marker, just wild flowers to mark the burial grounds (Personal Communication, December 1, 2010). Time is of the essence when it comes to green funerals, as the natural course of action a body takes is to start decomposing once it is dead. There are few things one could think of that are more unpleasant than smelling your loved one decompose as you try and pay your respects for them. Green funerals have not caught on with the mainstream as it is not quite perfected but may be something that emerges in the future” (Personal Communication, November 30, 2010).

Some people in the funeral business are getting creative as well, as baby boomers pass on one man is trying to make a funeral as enjoyable as possible. George Frankel has created a company that does specialty funerals. Starting Eternal Reefs, a company who turns your loved ones cremative remains into reef balls where fish can live (Wheaton, Skenazy, 2008) “I don’t mean to say I put the ‘fun’ in ‘funeral,” said Frankel, “but the whole family can come for a beach vacation.” This competition is small in the whole scheme of things, but nonetheless cuts into the traditional funeral home’s profits. Other examples of creative practices is sending your loved one into space, a costly but cutting edge choice, and also using the cremative remains to make a diamond, which in turn can be set on jewelry.

Nothing to do with competition in the field, another problem is the uncertainty of the industry. No one can predict with any sort of accuracy when they are going to die, which is where planning ahead or pre arrangements are made to ensure your family is taken care of should you pass away. These pre arrangements should be considered based on “their health status, lifestyle, and risk factors in approximating the timing of such an event” (Banks, 1998). The other issue with the lack of predictability of death lies in the ups and downs a business can face during the course of a given year. A funeral home may have thirty calls in one month followed by one or two the next month. In order for the business to make it through the slow months, a company must be ready financially and mentally for what lies ahead so their business can survive through the shortages. It is also important to treat the client you do receive with the up-most respect and care, as they can help shape the future of your company as they, as well as others in their family pass away.

The Market of Funeral Services:
In a standard family owned and run funeral home the service starts when you walk in the door. A funeral director, who in Ontario will have had to go through the funeral services program at Humber College, greets you. The funeral service program is a two-year all encompassing program which teaches you everything from “communications skills through behavioural science courses. A business management course to understand the challenges of operating a business and accumulate the necessary practical experience through a combination of lab work” (Humber College, 2010).

They also learn to consoling grieving family members, and how to embalm and prepare a body. They will have completed a work placement as well, which ensures that they have the proper training needed to attend to both you and your loved ones. Once the meet and greet is done you start planning the funeral its self. An average funeral costs around ten thousand dollars, but this figure can go up or down according to the quality of casket you choose, type of viewing you desire, and whether your or you family member’s body has to be brought in from another country or city. For example, a traditional graveside burial consisting of a middle-top of the line casket with a public viewing would cost roughly twelve thousand dollars in U.S currency (Funeral Wise, 2009). These fees also pay for a church if necessary, and the transportation for the immediate family and deceased to the graveside service should you choose it.

The Future of the Funeral Industry:
The funeral industry has seen change in the last fifty years. New technologies are being invented each day and people are getting new ideas for alternative services each day. The true family run funeral home that can adapt with the changing times will survive while the ones who can’t will not, leaving room for monopolies to come into place or new business owners to take their crack at the industry.

With the eldest of the Baby Boomers starting to pass away “the growth in the volume of deaths in the US over the next three to four year in [will] eventually reach twenty percent by 2020” (Wall Street, 2009). “We’re at 2.4 million deaths a year now. By 2020 that is an increase of 480 000 deaths a year, which is huge” (Wall Street, 2009). With numbers like that any economist can see that the funeral industry is here to stay. It will likely be the independently owned companies leading the way, as they still run the vast majority (over eighty percent) (Wall Street, 2009) of North America’s funeral homes.

The funeral industry is one that is still growing and evolving to meet the need of the ever-changing population. Though the core values are the same, caring for and consoling the family of the deceased and making sure their time with the home is as pleasant as one can ask for under such circumstances. The face of the industry is changing with things such as green, Eternal Reefs, the increase in demand for cremation by over fifty percent (Personal Communication, December 1, 2010), and other alternative funeral practices. The family owned places we grew up with are slowly being taken over by corporations turning their facilities into essentially factory. It is our choice how much longer the traditional funeral home will survive. We must ask ourselves the difficult question of what option we will choose once our time is up.